The Automobile Industry
analytical Essay
1592 words
Ever since the industrial revolution, America has grown to become one of the world's leading nations. One of the reasons for that is because of one of the best innovations and historical achievements ever created, which eventually became known as the automobile. The automobile has changed and revolutionized the way we transport ourselves, but also our lifestyle as a whole. Hence, The United States was and still is one of the key shareholders of the automobile industry; However, that has been a roller coaster ride for the big three automakers of the US. The US automotive industry has seen various powerful brands of the past, such as AMC and Studebaker motors that have eventually been discounted due to economic problems or being …show more content…
In this essay, the author
- Explains that america has grown to become one of the world's leading nations since the industrial revolution. the automobile revolutionized the way we transport ourselves, but also our lifestyle as a whole.
- Explains that ransom eli olds was one of the first engineers to successfully use the steam engine as a model for building automobiles, and henry ford introduced the assembly line.
- Explains that the era following world war ii was a pivotal point for the u.s. auto industry.
- Explains that the 1960's was the best and most iconic era of the us auto industry.
- Explains the reasons behind the decline of the u.s. automobile industry.
- Analyzes how political and economic issues led to the first recession of the automotive industry in the early 1980's. in the article, joel c. greshenfeld explains why the u.s. auto industry declined.
- Explains that the u.s automotive industry lost most of its share stocks across the globe as their european rivals were enjoying the luxuries and sports divisions.
This led to an astonishing record for America by having almost complete control of the automobile market as the world's estimate record of 1968 measured 65% of the world's automobiles were American. Soon after the 1972 oil crisis as well as economic recessions were on the rise, which was one of the key factors for the decline of American automobiles. The American automobile companies entered 1970's with greater hope of dominance; however, with problems on the rise the future seemed to continue, but not for the better. Hence, in the Article "How the U.S. Automobile Industry has changed" by Mark Davis, he explains the causes of the decline of the U.S. automobile industry. Mark Davis an author for Investopedia Magazine and articles states: "Foreign-made, fuel-efficient cars gained a stronger foothold in the American market during and after the 1973 oil embargo and corresponding rise in gas prices in the wake of the Arab-Israeli war". As stated by Mar Davis, European and Japanese automobiles have won the hearts of Americans as they made smaller automobiles, with smaller engines, which helped people to travel without the extra cost. As the 1980's began, Both Toyota and Honda had factories in the United States, which gave them more advantageous to sell their vehicles in the U.S. The big three responded by making various smaller vehicles, and …show more content…
Entering the 1990's, the big three were the dominant in the SUV as well as trucks and pickup. The big three yet could not win the majority of the automotive audience's attention; which was the daily transportation cars. Hence, in the article "The decline and Resurgence of the U.S. auto Industry" by Joel C. Greshenfeld, he goes on to prove and show details of why the U.S. auto industry declined and what were the cause. Joel C. Greshenfeld explains "By the end of the 1990s, it was clear that the U.S. domestic manufacturers lagged competitors on quality, and Toyota in particular benefited with the fastest growth in market share." The author went on to explain the ways the U.S. auto industry went to try to compete with their foreign competitors; however, their efforts were not the best. General Motors went on to lighten the weight of their cars in the hopes of helping the mpg, while Ford Motors went on from making semi Steel and metal cars to help lighten their production. Hence, leaving Dodge-Chrysler to downgrade the size of its vehicles as well as co-working with the Japanese auto manufacturer Mitsubishi to help with the body design of their
Related
- analytical
- explanatory
- opinion
- The U.S. Automobile Industryanalytical essayThe United States recession (which lead to a world recession), began in 1997 and significantly impacted the United States automobile industry during the recession period. The United States automobile industry is still reeling from the effects of the recession throughout the period of economic recovery that continues today. According to Chu and Su, “In this credit-driven recession, one of the hardest hit sectors was the automotive industry, along with the housing and financial markets. Chrysler and General Motors were pushed into bankruptcy; and 276,000 jobs in the automobile and parts industry were destroyed, a whopping 36 percent of the total employment in the sector”.
In this essay, the author
- Describes factors creating value in the industry and factors that will most likely input demand.
- Explains that the average cost of a car today is approximately $30,000, an increase from an average of $27,958 in 2009. average vehicle costs historically have not influenced vehicle sales.
- Opines that high unemployment rates, high oil and gasoline prices and changing demographics of the american consumer are the three factors that will most likely affect the u.s. automobile industry over the next five years.
- Explains the porter five forces framework with feedback effects as related to the u.s. automotive industry.
- Explains that the threat of new entrants into the u.s. automotive industry is low. government restraints such as safety and epa emission requirements coupled with high up-front capital requirements (sunk costs), brand equity or reputation required of a new firm make entry in the industry difficult.
- Explains that automobile manufacturers have offered consumers huge incentives such as low finance rates, and huge discounts as incentives for buyers to purchase new cars.
- Explains that consumers can easily switch between automobile dealerships and automobile manufacturers, so price pressure from substitute or complementary products is high in the u.s. auto industry.
- Analyzes how competitive pricing within the industry erodes automotive manufacturer’s profits by reducing their price-cost margins, while competition using consumer incentives drives up the fixed cost of new car development and increases the marginal costs of adding new features to automobiles.
- Explains that u.s. auto manufacturers require inputs such as labor, parts, tires, electronics and components. the united auto workers (uaw) exerts leverage over the benefits and wages provided by the big three.
- Explains that the united states recession began in 1997 and significantly impacted the automobile industry during the recession period.
- Analyzes the recent events that have affected the u.s. auto industry during the recession and the strides made by automakers to recover from near devastation.
- Opines that the supply and demand curve for u.s. automobiles should continue to rise as long as economic recovery continues.
- Analyzes the decline of passenger car production in the united states from over 4 million units in 2004 to just over two hundred thousand units. the sharp decline in sales in 2009 reflects the effects of the recession that began in 2007.
- Explains that the u.s. automotive industry is driven by the need to provide vehicles that are economical to operate. since the 1970's, the horsepower of small cars has increased dramatically.
- Explains that the market structure of the u.s. automobile market is considered to be an oligopoly which helps to minimize the effects of price-based competition.
- Argues that gm should use a cooperative game theory approach to sustain its corporate recovery.
2538 wordsRead More - Ford Motor Companyanalytical essayCurrently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors (GM), Honda, Toyota, and Volkswagen. A few United States (US) manufacturers produce 23% of the world’s vehicles while Japan is responsible for 21%. The tendency for the industry is to be a global producer of automobiles; parts can be made throughout the world and assembled in many different places. The trend of consolidation has continued throughout today. Presently, this is evident in the recent acquisition of Chrysler by Daimler-Benz in late 1998, thus forming DaimlerChrylser. These consolidations have proved beneficial to consumers since companies have been able to reduce costs and pass those savings on to the customers. Some of the other major examples of consolidation are Nissan selling off a controlling 37% interest to Renault; General Motor’s 49% ownership of Isuzu; and Ford’s 33% majority of Mazda. Other efforts to become more competitive have translated into the European Union dropping trade barriers and European carmakers employing cost reducing efforts. American manufacturers have seen 2-3% growth over the last few years. Some current trends are the explosion in popularity of the Sport Utility Vehicle (SUV) and big luxury vehicles.
In this essay, the author
- Explains that the automobile industry began with henry ford's production of the model t in the early 1900s. with the assembly line, cars became cheaper and quicker to produce.
- Explains that the industry is a global producer of automobiles, which is evident in the recent acquisition of chrysler by daimler-benz.
- Predicts that the global car market will grow to 64 million vehicles by the year 2002. the automobile industry will see more changes than it has in the last 100 years.
- Explains that the oversized vehicle was the body-style of choice among american consumers. japan's efficiency at producing this type of car allowed them to take 30% of the u.s. automobile market away from american manufacturers.
- Explains that the luxury vehicle segment has grown more competitive, yet maintains large profit margin potential. american buyers have been showing increased interest in european and japanese manufacturers.
- Explains that the sport utility vehicle segment has emerged as one of today's hottest markets through its increased sales. north-american consumers in higher income brackets are choosing suv’s in their garages.
- Explains that minivans market share was 8% in 1998, which was down 12% from 1991, due to a shift in consumer demand away from these vehicles.
- Explains that pick-up trucks, uniquely american vehicles that span all of the consumer target markets, show good potential for domestic manufacturers.
- Explains that the largest and most important product segment in the automotive industry is mid-size cars. popularity for midsize vehicles is due to consumers’ preference for luxury cars they cannot afford and compacts that they do not like.
- Explains that all these vehicle segments combine to form an industry in which consumers have continuously changing tastes. manufacturers who can compete worldwide, profit and growth potential will be ever present.
- Explains the history of ford, which began with the first car sold in 1903 and the millionth car produced in 1917. ford's finance subsidiary, ford motor credit, was formed in 1959.
- Explains that ford's three major subsidiaries are hertz, ford credit, and visteon.
- Explains that ford's prime focus in the 21st century will be on the consumer. ford has made a deal with microsoft to take advantage of the msn carpoint service.
- Explains that general ford has shown a steady pattern of sales growth from 1994 to 1997, growing at 5-7% each year. however, in 1998 sales were down 6%.
- Analyzes how ford's borrowing can be explained by its leverage ratios, and their debt-to-equity ratio, which is up from past years.
- Explains that ford's current ratio of.41 indicates that they have many current liabilities. this number is lower than the industry average, and their quick ratio has trended upward over the last 4 years.
- Evaluates ford's efficiency by examining its asset turnover ratio and days inventory held ratio, which show how effectively it is using its assets.
- Analyzes how ford's profitability is measured by the net profit margin, rate of return on assets (roa), payout ratio, and rate-of-return on common shareholder’s equity.
- Explains that ford's 1998 price/earnings ratio of 12.64, meaning investors are willing to pay $12.64 per dollar of earnings, has more than doubled from 1997, a positive signal from investors to ford management.
- Explains that the united auto workers (uaw) union represents the ford motor company's workforce. the company has $22 billion in cash to limit the threatening power of its unionized employees.
- Explains that interest rate fluctuations affect individuals' willingness to spend large amounts of disposable income and are a concern to ford. ford will spend $74 million to comply with pollution and hazardous waste control standards.
- Analyzes how ford has come to possess many strengths, such as their brand name, economies of scale, and diversified subsidiaries. ford's product lines reach all target markets.
- Explains that ford's large size could be a source of weakness to them because of bureaucracy, red tape, and timely reactions to changes in the industry.
- Opines that the opportunities for ford lie in their ability to lead the automotive industry in a global expansion. internet and e-commerce are examples of technological opportunities available to ford.
- Explains the threats facing ford include an increasing number of well-informed consumers attributable to the availability of information on the web. honda, gm, and chrysler are ford's main competitors.
- Explains that ford has been a leader in the automobile industry for the past 5 years. their 17.11% long-term annual growth rate shows they don't face going concern problems and expect to be profitable for many years to come.
- Compares ford's current stock price with its 52-week low of $40.25, and its high of $67.875. with 1,222 million shares outstanding, ford has a market capitalization of $54,531 million.
- Analyzes how a regression analysis of ford yields an accurate beta of 1.0151, compared with well-known financial news providers' estimates.
- Cites the following sources: http://www.askjeeves.com, cnbc, and msn.
3002 wordsRead More - historyexplanatory essayStarting in the 1920’s America began its shift towards a consumer culture as the economic growth of the nation began to depend more on the proliferation of consumer goods than of capital goods. Even at the outset of this trend, the automobile held a significant place in the new consumer economy. The automobile, which was once thought of as a rare luxury, was being sold by the millions. Assembly lines were becoming more efficient, thus allowing cars to be made more cheaply allowing the price of automobiles to drop. The growth of the automobile helped stimulate the economy through its dependence on other industries such as glass, rubber and steel, which were connected to the production of cars. These automobile related industries created new jobs, greater affluence and more spending power for millions of American consumers. Even at the beginning of America’s transformation into the consumer culture of today the automobile was at the forefront this conversion.
In this essay, the author
- Analyzes how suburbanization and consumer culture have changed america over the past sixty years. the automobile is an important product and tool of both institutions.
- Explains how the automobile helped stimulate the economy through its dependence on other industries such as glass, rubber and steel, which were connected to the production of cars.
- Explains that the automobile, and its cousin the truck, were increasingly used by corporations and businesses to market and distribute their products.
- Explains how the automobile gained prominence in american society during the post-war era. the average american family owned 2.1 cars in the 1950s.
- Explains that the automobile was a symbol of the consumer culture, and served as the vehicle for its proliferation. drive-in movie theaters and roadside motels targeted motorists.
- Explains that consumerism has drastically changed america. instead of the old fashioned general store, there are outlets and chains of specialized stores for particular interests. companies spend millions of dollars a year to advertise products to entice consumers into spending.
- Explains how the automobile changed the way that the average american lived during the post-war era.
- Explains that suburbanization caused many changes in the fabric of american life. suburbanization created a form of financial segregation of races. urban sprawl caused air pollution and global warming.
- Opines that the automobile has played a pivotal role in changing america into the web of roads, towns and shopping malls that it is today.
1421 wordsRead More - Impact of the Recession on the US Auto Industryanalytical essayIn the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...
In this essay, the author
- Explains that the auto industry and its labor were hurt more than any other industry during the recession.
- Explains that the detroit three controlled 95% of the market in the 1950s, and the recession shocked the auto industry.
- Explains that the auto industry depends on economic cycles more than any other industry. the detroit three closed down some of their facilities and restructured.
- Explains that the detroit three spend $73.20 per hour on total employee compensation, which includes health care, pension plans, and other benefits.
- Explains that domestic auto manufacturers are obligated to compensate their laid-off employees, which amounts to another $350 per vehicle.
- Explains that high costs are not only the problem of auto manufacturers, but also the obstacle of the companies that provide the parts for the assembly of these automobiles.
- Explains that detroit is the bedrock of domestic auto industry and relies on it more than any other place in the nation.
- Analyzes the problem of under-reporting of violent crime leading to false statistics. the detroit police department admitted a reporting error where the actual homicide number is 423 which puts detroit back to number one when it comes to per capita murder rate.
- Argues that the detroit three should negotiate better union contracts, manufacture more competitive and fuel efficient cars, and create less dependence on the auto industry. this would soften the impact of recession on michigan's economy.
1759 wordsRead More - The Crash Of The Car Crashexplanatory essayThe US market share of US companies immediately dropped, and despite strong efforts made by US manufacturers this has become the status quo. As of 2014 GM only commanded a 17.6% market share, Ford a 14.7% share, and Chrysler just 12.7%. In 2015 the Japanese car company, Toyota saw greater profits and all three of them combined(Investopedia). While the 2008 recession was global in scale and no county was spared foreign automakers were not hit as hard, nor did they need to expend resources reforming their companies, fighting legal battles, and developing new cars to meet new demands. It is this competition from foreign automakers that has been much of the drive for change in the US. Highly successful foreign cars, such as the Toyota Prius, has shown US manufacturers that hybrid and electric cars will be future of the auto
In this essay, the author
- Explains that the auto industry in the united states has been through a rough decade, starting with the 2008 industry crash, followed by government regulations and legal battles, and has consistently been in competition with foreign automakers.
- Explains that the current state of the us auto industry can be directly attributed to the crash of 2008. companies were forced to take emergency actions to stay in business.
- Opines that technology is advancing by leaps and bounds. sensors placed around a vehicle’s exterior combined with gps navigation will one day reduce the burden placed on them. remote shutdown systems will enable law enforcement to instantly put an end to high-speed chases
- Explains that the 2008 crash favored foreign automakers who had already emphasized fuel efficiency and affordability. the us market share of us companies dropped, and the japanese car company toyota saw greater profits.
- Explains that consumers have rewarded foreign automakers for their early initiative into efficient and environmentally friendly vehicles, but us companies have not been forgotten.
789 wordsRead More - Nineteen Twenties Essayanalytical essayGeneral Motors had surpassed Ford as the most popular automaker, now offering different models of vehicles that appealed to different social classes. The auto industry spurred growth in other industries such as oil exploration and production, the rubber industry, steel, and the expansion of corporations. During this era we is when we see The United States become the most powerful economy. Corporations and now seeking other opportunities abroad, an example of this is Ford expanding into Liberia to gain more control over the production of
In this essay, the author
- Explains that the 1920's was an era of many things. the roaring twenties and the jazz age were considered a time of prosperity and revolt.
- Explains that the auto industry was the catalyst of the economy for the nineteen twenties. it spurred growth in other industries such as oil exploration and production, the rubber industry, steel, and the expansion of corporations.
- Analyzes how the twenties saw a shift in american society, where thriftier and less likely to take on debt. borrowing had become much easier to do, banks had made credit available to almost everyone.
- Explains that prohibition took effect in 1920, and was part of the progressive movement. speakeasies and bootlegging were heavily controlled by organized crime.
- Explains that the nineteen twenties saw the continuation of black southerners migrating from the rural south to the promise land of the industrialized north.
- Explains that the nineteen twenties had been a prosperous period leading up to the crash of the stock market on black tuesday in 1929.
- Analyzes how the prosperity of the 1920's reinforced the definition of "freedom" even with the economic crash and the failure of president hoover and his administration to react.
853 wordsRead More - Factors that Caused the Demographic and Economic Decline of Detroit in Regards to the Marxist Theoryanalytical essaySnyder, M. (2012, January 19). 17 Facts About The Decline Of The U.S. Auto Industry That Are Almost Too Crazy To Believe. The Economic Collapse. Retrieved November 17, 2013, from http://theeconomiccollapseblog.com/archives/17-facts-about-the-decline-of-the-u-s-auto-industry-that-are-almost-too-crazy-to-believe
In this essay, the author
- Analyzes how detroit, a bustling urban center rife with economic prosperity, filed for the largest municipal bankruptcy case in u.s history on july 18, 2013.
- Explains that detroit's central location in the great lakes region, near major centers of iron, coal, and copper mining, made it an ideal place for the automotive industry to take a foothold.
- Analyzes how marx's theory fails to describe intra-class conflict outside of the work environment, where a relationship to the means of production isn't always the source of tension.
- Explains that detroit continued its decay in the 1970s and 1980s. the city's african-americans were left a poor wasteland. violent crime and arson became common, and gangs made the city the capital of drug trade.
- Analyzes how detroit's automotive industry began growing cancerous, due to car companies failing to anticipate changing consumer requirements in global markets.
- Argues that marxist theory, though fallible, can describe detroit's economic and demographic decay.
- Analyzes how the fall of detroit, the rust belt's most valuable player, was the aggregation of several factors, with some arguably more detrimental than the others.
- Analyzes how marx understood the inner workings of modern racism.
- Cites fletcher, m. a., johnson, richard, and koremans, sonja.
1866 wordsRead More - The Influence of Automobiles on American Societyexplanatory essayEver since the invention of the automobile, the car has been a large part of American life. Currently there are more than 16 million cars sold that are made in America (Magee, Ferrara, and LaMeau 149). It is something that is used every day in America by millions of people. The automobile opened the door for new opportunities and new experiences. It symbolizes the American ideal of freedom and independence. Americans have embraced the automobile and have implemented it into their lives. Automobiles fueled the American economy and helped establish a nationwide network of roads. Automobiles have had a great influence on American society through their history, the pioneers of the automotive industry, the companies involved in the automotive industry, and the highway system.
In this essay, the author
- Explains that henry ford and walter perry chrysler are important to american society with their innovative ideas, such as the model t, the assembly line and ford motor company.
- Explains the history of the automobile, from 1770 to 1914. the first self-propelled vehicle was the fardier à vapeur.
- Explains that walter percy chrysler contributed to american society through his ideas and different automobile inventions. the automotive industry created jobs and stimulated the economy.
- Explains that "automobile industry." gale encyclopedia of u.s. economic history. ed. thomas carson and mary bonk.
1333 wordsRead More - America's Auto Bailoutanalytical essayIn 2008, the automotive industry suffered a big hit which caused a crisis in the United States economy. During the 2000s there was a phase known as the “SUV CRAZE” where the majority of sales for General Motors (G.M.) and Chrysler were “pickup trucks and sports utility vehicles”(Auto Industry Crisis). Trucks and SUVs have been known to use a lot of gasoline to help with their overall performance. But during 2003, the price of oil per barrel “went up from $30 to $135”(Rod Franchi). This caused the price of gasoline to rise and discouraged people from buying these big trucks that would use a lot of gasoline. This caused everything in the auto industry to go downhill. In 2007 around 16 million were sold, but in 2009 that number went down to 9 million cars sold. Now with fewer cars being sold G.M. and Chrysler were losing money and was desperate for help. With congress trying to find a solution, they proposed an auto bailout that would help the industry from dying. Although many argue the bailout gives an excuse to big car companies to fail, it was necessary because it helped save and create millions of jobs around the country.
In this essay, the author
- Explains that the automotive industry suffered a crisis in the united states economy during the 2000s, when the price of oil per barrel rose from $30 to $135. congress proposed an auto bailout to help the industry.
- Explains that the $80 billion auto bailout was to stimulate the growth and production of the automotive industry.
- Analyzes bump, philip, and dionne, e. j., jr.
- Cites hassett, kevin a., rattner, steven, and the new york times. the 2009 bailout was necessary.
834 wordsRead More - General Motors Recoveryopinion essayGeneral motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have included a graph which shows the decline in all of auto industry.
In this essay, the author
- Explains that general motors holds about one percent of the united states employment. the company sold over 219,000 vehicles in november of last year only was able to sell 155,000 cars and truck to the american public declining 41 percent compared to last.
- Explains that gm's payroll pumps $8.7 billion a year into its assembly workers' pockets and supports nearly 900,000 jobs.
- Explains that gm's strategy of keeping its factories humming and squeaking by the time consumer start to buy again is diminishing.
- Opines that gm must become a much smaller company within five years, with fewer brands and models, and reduced costs. the idea of being no. 1 is drilled into the company's head.
- Opines that gm's plans to reverse the sales slide with cool new car models make complete sense.
- Analyzes how general motors has to decide whether to settle for halfway measures that will only delay an inevitable confrontation when the uaw contract expires in two years or if they should risk a labor war to get big savings sooner.
- Opines that a government rescue for automakers is important because it could save the companies from bankruptcy.
- Opines that the country needs to make more cars and export them to different countries where they have the money and wealth to buy cars.
- Analyzes how general motors might be able to fix themselves without the help of the government by asking the union to disregard their contract and life time retirement payments rather than starting a fight.
1939 wordsRead More